BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                            



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                                    THIRD READING


          Bill No:  AB 1144
          Author:   Hall (D)
          Amended:  6/19/13 in Senate
          Vote:     21

           
           SENATE PUBLIC EMPLOYMENT & RETIREMENT COMM.  :  4-0, 6/10/13
          AYES:  Beall, Block, Gaines, Yee
          NO VOTE RECORDED:  Walters

           SENATE APPROPRIATIONS COMMITTEE  :  6-1, 6/24/13
          AYES:  De León, Gaines, Hill, Lara, Padilla, Steinberg
          NOES:  Walters

           ASSEMBLY FLOOR :  51-19, 5/16/13 - See last page for vote


           SUBJECT  :    Public Employees Medical and Hospital Care Act:  
                      City of Carson

           SOURCE  :     City of Carson


           DIGEST  :    This bill, for an employee hired on or after January  
          1, 2014, requires the employer contribution for post-retirement  
          health benefit coverage for an employee of the City of Carson to  
          be based on specified percentages associated with the employee's  
          credited years of service, which would reach 100% when the  
          employee attains 10 years of credited service.  This bill  
          defines credited service as service performed with the City of  
          Carson.  Requires that the employer contribution with respect to  
          each employee be mutually agreed upon through collective  
          bargaining, as specified, except for an unrepresented employee,  
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          for whom the employer contribution would be established by a  
          city council resolution.  This bill requires that the employer  
          provides any information requested by the Board of  
          Administration of the California Public Employees' Retirement  
          System (CalPERS Board) that it deems necessary to implement the  
          section.

           ANALYSIS  :    

          Existing law:

          1. Establishes PEMHCA, administered by the CalPERS Board, to  
             provide health coverage for employees and annuitants of the  
             State and the California State University.

          2. Allows a school or local agency employer to contract with  
             CalPERS for PEMHCA and requires the employee or annuitant  
             contribution, when added to the employer contribution, to  
             cover the total cost of the PEMHCA coverage premium.

          3. Defines an annuitant as one who, among other requirements,  
             retires from the system within 120 days of separation from  
             public employment.

          4. Does not allow contracting employers to provide PEMHCA  
             coverage to active employees without also covering retired  
             annuitants.  However, with respect to the employer  
             contribution for annuitants, provides specified options  
             available to the contracting agency, including:

             A.    An equal employer contribution amount for both  
                active employees and annuitants.  Under this option, an  
                employee who retires and meets the definition of  
                annuitant becomes 100% vested and receives an employer  
                contribution amount equal to what the active employees  
                receive; or

             B.    For a contracting agency that joins PEMHCA on or  
                after January 1, 1986, the option to pay a lesser  
                employer contribution amount for annuitants than for  
                active employees as long as the agency increases its  
                contribution for annuitants each year until it equals  
                the agency's contributions for active employees as  
                specified; or

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             C.    A pre-set "vesting schedule" based on an employee's  
                credited years of service to determine a set percentage  
                of the employer contribution amount for annuitants.   
                Under this option, an annuitant would have at least 10  
                years of CalPERS credited service to qualify for 50% of  
                the employer contribution and would need 20 years, all  
                with the employer providing PEMHCA, to become eligible  
                for 100% of the employer contribution.  At least five  
                years must be with the employer providing PEMHCA; or

             D.    Allows under the 10-20 year vesting schedule, an  
                employer contribution of 100% if the annuitant retired  
                for disability or if the annuitant had 20 years of  
                service, regardless of the length of separation from  
                service prior to retirement.

          5. Provides specified and individual variations to the above  
             options and requirements under separate statutes specific to  
             the City of San Diego, school employers, Alameda County  
             Transportation Improvement Authority, and Mariposa County.   
             These statutes are subject to collective bargaining  
             agreements.

          This bill:

          1. Requires the employer contribution with respect to each  
             annuitant to be mutually agreed upon through collective  
             bargaining by the City of Carson and the exclusive  
             representatives of employees of the city.  Permits the  
             employer to adjust the amount from time to time through a  
             collectively bargained memorandum of understanding (MOU).

          2. Requires changes to the employer contribution to be ratified  
             by a resolution passed by the city council of the City of  
             Carson.

          3. Requires, in the case of employees not represented by a  
             bargaining unit, the employer contribution with respect to  
             each annuitant to be determined pursuant to a resolution  
             passed by a majority of the city council of the City of  
             Carson.

          4. Requires the City of Carson to certify to the CalPERS Board,  

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             in the case of employees not represented by a bargaining  
             unit, that there is not an applicable MOU. 

          5. Defines the credited service to mean credited service  
             performed with the City of Carson.

          6. Requires the City of Carson to provide the CalPERS Board any  
             information requested that it determines is necessary to  
             implement these provisions.

          7. Specifies that the proposed vesting schedule applies only to  
             the City of Carson and only with regard to an employee of the  
             city who is first hired on or after January 1, 2014.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  No


          According to the Senate Appropriations Committee:


           Minor, absorbable administrative costs to CalPERS (Special  
            Fund).

           Unknown, potentially significant savings to City of Carson  
            (Local Fund).

           SUPPORT  :   (Verified  6/26/13)

          City of Carson (source)
          AFSCME, Local 809
          City of Carson Association of Confidential Employees 
          City of Carson Association of Management Employees 
          City of Carson Professional and Supervisors Association


           ARGUMENTS IN SUPPORT  :    According to the sponsor, the City of  
          Carson does not currently have a vesting schedule (i.e.,  
          annuitants currently get 100% of the employer contribution  
          toward post-retirement PEMHCA if they have 5 years of CalPERS  
          credited service).  The City of Carson and its employees'  
          representative have collectively bargained to implement a  
          vesting schedule that would require annuitants to have at least  
          10 years of credited service with the city to get 100% of the  

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          employer contribution.  However, "this vesting schedule is not  
          currently authorized by law and would require legislative action  
          to authorize an exemption from the pre-set vesting schedule  
          currently in statute."

           ASSEMBLY FLOOR  :  51-19, 5/16/13
          AYES:  Alejo, Ammiano, Atkins, Bloom, Blumenfield, Bocanegra,  
            Bonilla, Bonta, Bradford, Brown, Buchanan, Ian Calderon,  
            Campos, Chau, Chesbro, Cooley, Daly, Dickinson, Eggman, Fong,  
            Fox, Frazier, Garcia, Gatto, Gomez, Gordon, Gray, Hall, Roger  
            Hernández, Jones-Sawyer, Levine, Lowenthal, Medina, Mitchell,  
            Mullin, Nazarian, Pan, Perea, V. Manuel Pérez, Quirk,  
            Quirk-Silva, Rendon, Salas, Skinner, Ting, Torres, Weber,  
            Wieckowski, Williams, Yamada, John A. Pérez
          NOES:  Achadjian, Bigelow, Chávez, Conway, Dahle, Donnelly,  
            Hagman, Harkey, Jones, Linder, Logue, Maienschein, Mansoor,  
            Nestande, Olsen, Patterson, Wagner, Waldron, Wilk
          NO VOTE RECORDED:  Allen, Beth Gaines, Gorell, Grove, Holden,  
            Melendez, Morrell, Muratsuchi, Stone, Vacancy


          JL:d  6/26/13   Senate Floor Analyses 

                           SUPPORT/OPPOSITION:  SEE ABOVE

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